2024 (5) TMI 711 - HC - Income Tax

Ex parte assessment order passed u/s 144B - violation of essential principles of natural justice - HELD THAT - According to the revenue itself, in the first place no proceeding took place on 22.03.2024. Second, no order came to be passed on that date, nor any further date was fixed in the proceedings. Thereafter, the proceeding continued wholly ex parte to the extent a draft order was prepared and finalised. Even in those proceedings no opportunity of hearing was given to the assessee to furnish any response. Thus, on the own showing of the revenue authorities, wholly ex parte assessment order came to be passed for no fault of the assessee. In the first place, wholly inadequate two day time was granted to the assessee to furnish reply to the notice dated 19.03.2024 and second without conducting any proceeding on the date fixed, ex parte assessment order has been passed. As gross violation of essential principles of natural justice has been committed by the assessing authority. No real opportunity of hearing was granted to the assessee for the date 22.03.2024. In any case, even if the assessee had failed to avail that opportunity and failed to apply for adjournment on that date, it never became to the assessing authority to then pass no order on the date 22.03.2024 and to proceed against the assessee wholly ex parte , thereafter. The assessment order dated 28.03.2024 has been passed five days after the last date fixed that too without conducting any proceeding involving the assessee. Neither on 22.03.2024 nor on subsequent dates there is record of any proceeding or any other date fixed. Accordingly, the order passed is set aside. The petitioner may treat that order as final show-cause notice and submit its reply thereto within a period of one week and not later. Thus, written reply, if any, may be filed by the petitioner by 20.05.2024. If the AO is inclined to accept the explanation furnished by the assessee, in entirety, he may pass the consequential order without fixing any further date for hearing as the petitioner has not requested for the same.

Summary

Issues Involved:

1. Ex parte assessment order u/s 143(3) read with Section 144-B of the Income Tax Act, 1961.
2. Adequacy of notice and opportunity of hearing.
3. Violation of principles of natural justice.

Summary:

1. Ex parte assessment order u/s 143(3) read with Section 144-B of the Income Tax Act, 1961:
The petitioner contested the ex parte assessment order dated 28.03.2024 for A.Y. 2022-23. The court noted that the proceedings initiated in October 2023 did not fix any date initially. The first notice was uploaded on the revenue authorities' web portal on 19.03.2024, fixing the hearing date as 22.03.2024. However, the petitioner was not informed via registered e-mail or SMS, receiving the intimation only on 28.03.2024. Despite the petitioner seeking an extension on 28.03.2024, the assessment order was passed the same day without considering the application.

2. Adequacy of notice and opportunity of hearing:
The court examined the order sheet and found that the case was assigned to the National Faceless Assessment Centre (NFAC) on 16.05.2023, and various notices were issued subsequently. However, after the adjournment on 08.09.2023, no further hearing date was fixed until the show-cause notice on 19.03.2024, which granted only two days for the petitioner to respond. The court highlighted that no proceedings occurred on the fixed date, 22.03.2024, and the assessment order was passed ex parte without any further opportunity for the petitioner to respond.

3. Violation of principles of natural justice:
The court referred to a previous judgment in Satish Kumar Bansal Huf Vs. National Faceless Assessment Centre Nafac And Another, emphasizing the mandatory nature of providing an opportunity for a personal hearing u/s 144B(6)(vii) and (viii). The court found gross violations of natural justice principles, as the petitioner was not given a real opportunity to be heard. The court concluded that the assessment order dated 28.03.2024 was passed five days after the last fixed date without any proceedings involving the petitioner.

Conclusion:
The court set aside the assessment order dated 28.03.2024, allowing the petitioner to treat it as a final show-cause notice and submit a reply within one week. If the Assessing Officer rejects the explanation, a hearing date with at least 15 days' notice must be fixed. The petition was allowed with no order as to costs, and corrective measures were directed to be taken by the respondent authorities.